How Intel Eliminated War From Its Supply Chain

Money from gold ore should go to these miners, not the warlords who own the mine. (Photo/Anjan Sundaram)

Seven years ago, Carolyn Duran realized the company she worked for had blood on its hands.

Intel — the world’s largest semiconductor maker, where Duran led sustainability efforts — was building many of its products with minerals and metals extracted from mines in the Democratic Republic of Congo. Gold, tantalum, tin and tungsten, all crucial components in many electronics, fund an on-again-off-again civil war marked by rape and brutal violence.

But getting these conflict minerals out of Intel’s supply chain was not as simple as prohibiting purchases from militant-controlled mines. Intel didn’t actually buy any ore. The raw materials were sold to smelters in places like Russia and China, via buyers in neighboring African countries. Tech firms like Intel wouldn’t buy the minerals until they’d been refined and were ready for use in phones and computers.

“In the beginning, we didn’t care, and just got the cheapest material — we could have been funding conflict inadvertently at that time,” Duran told The Huffington Post. “But then Intel and others came there and made a business case.”

Less than two years after Intel became aware of its role in the Congolese conflict, the company devised a plan. Intel established a consortium of independent, third-party nonprofits that work with the local government to audit mines. Once a mine earns a positive rating, its ore is placed in labeled bags that can be tracked to smelters. Intel also donated $250,000 to a fund to help smelters who want to meet the tech giant’s ethical guidelines but cannot afford to retrace their supply chains.

The system isn’t perfect. There’s room for error — a wayward local official here, a mislabeled bag of ore there. But in 2016, two years after Intel eliminated conflict minerals from all its microprocessors, every Intel products uses minerals from audited mines only.

“It’s not 100 percent foolproof. There could be incidents of corruption,” Duran said. “But if we waited for a perfect system, we’d be embargoing the whole country.”

That wouldn’t do. The Democratic Republic of Congo — where the average citizen earns $394.25 per year — is the poorest country in the world, according to a 2015 analysis published by Global Finance magazine. Banning Congo’s resources from the global marketplace would only further impoverish the central African nation’s 67.5 million people.

Instead, the auditing system is redirecting mineral revenues from warlords to miners. The amount of money from three major minerals — tantalum, tin and tungsten — that funds war dropped 65 percent between 2010 and 2012, according to a study by the nonprofit Enough Project, which first lobbied Intel to address its supply-chain problem. That number continues to fall.

“That’s pretty much the polar opposite of what was the case with those mines five years ago,” Sasha Lezhnev, associate director of policy at the Enough Project, told HuffPost. “Intel has really driven the whole supply chain reform movement, which has really revolutionized buying practices… [for these] minerals worldwide.”

The move was no doubt a proactive one for Intel. But it almost certainly wasn’t driven by altruism alone. Young people are increasingly demanding transparency and higher ethical standards from the companies whose products they buy. Some 51 percent of people who say they will pay extra for sustainable products are between 21 and 34 years old, the coveted “millennial” demographic, according to a 2014 survey by Nielsen.

So Intel’s investment in cleaning up its supply chain may yield loyal customers down the line.

“It’s a pain in the ass, but they want to do this,” Andrew Winston, a sustainability consultant who wrote the book The Big Pivot, told HuffPost. “Who doesn’t want to know that their supply chain isn’t causing massive suffering?”

The next step in the movement to cut conflict minerals out of the global marketplace will be getting more consumer-facing companies to reform their supply chains. Whereas Intel, HP and SanDisk — companies that mostly sell products to other businesses — have overhauled their supply lines, camera makers like Canon and Nikon, along with the video game giant Nintendo, have made little progress, according to the Enough Project.

“Intel is the biggest corporate leader in this space,” Lezhnev said. “But we need more companies to step up, because the battle over conflict minerals, especially in Congo, is not over.”